Initial Set-up and Contribution

TFSA Initial Set-up and Contribution

If you have a TFSA with a financial institution, you generally have 3 options to contribute: over the phone, online, or in-person.

For your initial set-up and contribution, you may be asked to do it in-person so a financial advisor can offer suggestions based on your risk profile, and also let you know about any bank-specific fees that may arise from setting up, transferring, or withdrawing money from your new TFSA.  After the initial contribution and depending on your financial institution, your next transactions may be done online, just like you do for your regular chequing and savings accounts.

If you have a self-directed TFSA, then you are responsible for the initial set-up and knowing the associated fees.  But there are independent professional financial advisors out there who can help you out; if you are new to investing it is a good idea to at least consider using them once or twice before you get more comfortable with the idea of being on your own.

Contribution room

Your TFSA has an annual contribution limit which you must work within in order to avoid over-contribution penalties.  As of 2025, that annual limit is $7,000, and will increase in $500 increments with inflation:

2024-2025 annual limit: $7,000
2023 annual limit: $6,500
2019-2022 annual limits: $6,000
2016-2018 annual limits: $5,500
2015 annual limit: $10,000
2013-2014 annual limits: $5,500
2009-2012 annual limits: $5,000

The government announced a $500 increase to the TFSA limit, as inflation has risen and TFSA contribution limits are tied to the rate of inflation. The last limit was increased in 2024 when the maximum contribution amount went from $6,500 to $7,000.

If you have been contributing several times over the course of a year and are unsure how much contribution room you have left, the CRA will keep track of this for you through My Account.  

What is your personal contribution room each year?

Your personal contribution room is determined by 3 factors:

• the annual TFSA dollar limit since 2009
• any unused room leftover from previous years
• any withdrawals you made in the previous year

So, depending on your age and whether you’ve made contributions in the past, you could have up to $102,000 of contribution room available!  Note if you don’t use it all, it just rolls over to the next year…you don’t have to worry about losing it down the road if you can’t use it all!

Investment income earned (or lost) within a TFSA will NOT affect your contribution room for that current or future years. For example, if you earned $1000 inside your TFSA in 2024, your 2025 contribution limit is still $7000.

Likewise, if you lost $1000 inside your TFSA in 2024, this does not mean that your limit for 2025 changes to $8000. The limit is still $7000!  So you cannot use gains or losses within a TFSA to justify contributing more in a year to make up for it…you will get dinged by the CRA for over-contributing!

Specific types of transfers between TFSAs such as direct transfers from your spouse or common-law partner, or exempt transfers from a deceased person’s TFSA, do not count towards eating up your contribution room as well. So it is a good idea to have a plan in place in case your relationship dissolves or you die unexpectedly…you may as well ensure your beneficiaries can have the money sitting inside your TFSA!

Sources:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html
https://www.rbcroyalbank.com/investing/invest-now.html?tab=tfsa_tab&ProspectID=12EFA8E5A91B488FBB6E5DF5A5F0CBA6